On Oct. 1, the U.S. Treasury and the IRS released the rules for the education freedom tax credit, the first federal scholarship tax credit in our country’s history. It is a monumental moment for education in America. Beginning Jan. 1, 2027, taxpayers can give up to $1,700 to a scholarship-granting organization and receive a dollar-for-dollar federal tax credit. Married couples filing jointly can claim a combined credit of up to $3,400.
Those gifts will fund scholarships for K-12 students from families earning up to 300% of their area’s median income, and Treasury estimates that about 96% of children in participating states will be eligible. Thirty states have opted in so far, and more are expected to follow. Just as important, the rules make clear that states cannot add requirements stricter than federal law or use discretionary standards to shut out qualifying organizations.
